Lessons from the Spanish flu: social distancing can be good for the economy
Faced with the deadly covid-19 pandemic governments must decide how much economic disruption to tolerate in order to suppress the disease, or at least to slow its spread. President Donald Trump may have had the economic costs in mind when he tweeted on March 23rd, “we cannot let the cure be worse than the problem itself.” Having mused about lifting lockdowns by Easter, he has since decided to maintain them until the end of April.
According to a new paper by Sergio Correia and Stephan Luck of the Federal Reserve and Emil Verner of MIT, the notion that reducing deaths from a pandemic necessarily hurts the economy is false.